Press Conference to Launch ‘World Economic Situation and Prospects 2014’ Report

The global economy had recuperated, but continued to be subdued, according to a United Nations report, entitled World Economic Situation and Prospects 2014, launched today at Headquarters.

Shamshad Akhtar, Assistant Secretary-General for Economic Development, Department of Economic and Social Affairs, said much of the world’s economic weakness stemmed from developed economies which continued to struggle, including the euro area and the United States.  However, Ms. Akhtar said there were some encouraging signs, including indications the euro area was finally moving beyond its protracted recession and recent signs of growth in both the United States and Japan.  Domestic conditions in developing countries also showed improvement.

She said that trade continued to be far below pre-crisis levels, although, as demand picked up as a result of increased confidence, trade was likely to gain momentum in developed, as well as developing, countries.  A number of trade agreements were also in the negotiating phase, which, when implemented, could also spur further trade growth in the medium-term.

High unemployment, she noted, remained a key challenge for many areas of the world, particularly as protracted, long-term unemployment diminished employment prospects for many workers.  Unacceptably high unemployment rates disproportionately affected youth and vulnerable populations in many regions.

Capital flows declined for many developing countries and associated volatility generated macroeconomic complications, she said.  Volatility of flows, particularly with regard to the United States Federal Reserve’s tapering of the quantitative easing programme, had strong consequences.  The potential for substantial downside risks of the premature tapering of quantitative easing could impact global growth.  Emerging markets should be prepared to deal with the impact of global outflows as quantitative easing was tightened.

Pingfan Hong, Chief of the Global Economic Monitoring Unit, Department of Economic and Social Affairs, said the world economy in 2013 was unable to meet even the most modest projections.

However, the global economy was expected to grow at a pace of 3 per cent in 2014, he said.  Gross domestic product in the United States was expected to increase to 2.5 per cent in 2014, while Western Europe was expected to grow by 1.5 per cent as it emerged from its recession.  Expansionary policies in Japan seemed effective, although forthcoming structural reforms were less certain.  Growth in Japan was projected at 1.5 per cent for 2014.

He said that growth prospects in Africa were robust, although highly dependent on improvements in the global economy.  In China, growth was expected to maintain a pace of about 7.5 per cent over the next few years, while India’s economy was forecast to grow by more than 5 per cent.  Growth expectations for Brazil and the Russian Federation were more modest, at 3 per cent and 2.9 per cent, respectively.

Responding to a question on how central banks could contribute to growth, Ms. Akhtar said, “The best thing they can do is to make sure that the monetary policy stance of the various advanced economies’ central banks are well-calibrated and there is a very clear communication of the timing and sequencing of monetary easing and work closely with the emerging markets that are repositories or receivers of capital flows.”

In response to a question on how geopolitical tensions impacted economic growth, she said, “I don’t think that there are any magic bullets to resolve these overnight and these are realities.  I do think some economies have a tremendous amount of resilience and have learned to operate within the political constraints and the environmental constraints in which they operate.”

Regarding the challenge presented by rampant unemployment in Africa and how it impacts growth, Matthias Kempf, Economic Affairs Officer, Global Economic Monitoring Unit, Department of Economic and Social Affairs, reported that in countries such as South Africa, where for several years unemployment numbers hovered around 25 per cent, only significant structural changes could alleviate the problem.  “Despite the positive headline figures, unemployment is a significant, ongoing, big problem,” he said.

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For information media • not an official record